The Aussie slipped 0.4% to $0.6696 , having breached its 200-day moving average support of $0.6750 overnight to finish 0.5% lower, weighed by a dovish Reserve Bank of Australia which put rate hikes on hold this month. It now has support at the 21-day moving average of $0.6681.
The kiwi dollar was also 0.4% lower at $0.6293 , after giving up almost all of its post-RBNZ gains overnight. The Reserve Bank of New Zealand stunned markets with a larger 50 basis point hike, lifting the kiwi against the Aussie to the highest since late December. It has support at $0.6250 while major resistance is at $0.6390.
The pair also each weakened 0.6% against the Japanese yen to the lowest in a week. After the local action, traders are shifting their focus back to global risks. Soft U.S. economic indicators this week, including the disappointing services sector data and a private employment report, raised fears of a hard landing as markets suspect the Federal Reserve might have tightened too much.
Indeed, futures markets are split on whether the Fed will have to raise rates again at its next meeting in May, and have priced in cuts of a total of 70 basis points by the end of this year, with reductions commencing as early as in September. Analysts are expecting Friday's non-farm payrolls data will show 240,000 jobs were added last month, the lowest in three months, and unemployment remained unchanged at 3.6%. "Relative interest rates and risk sentiment are still the key AUD drivers ... Development on these two fronts therefore likely hold the key to AUD movements in coming weeks," said analysts at National Australia Bank.
The RBA also sounded the alarm on tightening lending
conditions after the collapse of three U.S. banks and the Credit
Suisse take-over, which would be a headwind for economic growth.
Australian bond yields, tracking U.S. counterparts, eased to
the lowest since late March. The yield on three-year bonds was 4 basis points lower to 2.807%, while ten-year
yields slipped 5 bps to 3.194% .
(Reporting by Stella Qiu; Editing by Sonali Paul)
